KUALA LUMPUR – Middle-income earners will be able to claim tax relief on a wider range of expenses under Budget 2027, including postnatal care, children’s tuition fees, sports shoes, artificial intelligence (AI) subscriptions and pet adoption.
Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim announced several changes to individual tax reliefs when tabling the national budget today, alongside an increase in the individual tax relief limit from RM9,000 to RM12,000.
The limit, which has remained unchanged since 2010, will be raised to provide greater relief to taxpayers, particularly those in the middle-income M40 group.
Under the expanded provisions, medical tax relief will cover postnatal care services, while relief for the care of parents and grandparents will be broadened to include all caregiving expenses, rather than being restricted to healthcare-related costs.
Sports-related tax relief will also be extended to purchases of sports shoes.
For education, the government will expand relief to cover all fields of study and tuition fees for children, widening the scope of eligible education-related expenses.
The lifestyle tax relief category will also be expanded to include subscriptions to AI services, as well as vaccination expenses and the adoption of pets from registered centres.
Beyond the expanded reliefs, the government will reduce individual income tax rates by one percentage point for selected chargeable income brackets.
The rate for those earning between RM70,000 and RM100,000 will be lowered to 18%, while the rate for the RM100,000 to RM150,000 bracket will fall to 24%.
However, the government will increase the income tax rate for individuals earning more than RM1 million to 30%, as part of a progressive approach to taxation.
Anwar said the increase in tax relief and reductions in selected individual income tax rates were expected to provide additional disposable income of up to RM1,600 to about five million taxpayers.
The measures are intended to ease taxpayers’ financial burden by allowing a broader range of household, healthcare, education and lifestyle expenses to qualify for tax relief. – October 9, 2026